Inflation holds at 6pc as economy shows signs of steadying

ISLAMABAD: Pakistan’s inflation rate is expected to hover around six per cent in November, driven mainly by pressure on food prices and seasonal factors affecting agricultural output, according to the Ministry of Finance’s latest Economic Outlook.

The report notes that while food inflation may rise slightly due to supply-side pressures, the broader economic environment appears to be improving. The ministry attributes this stabilisation to ongoing structural reforms, improved fiscal discipline and a steady rise in remittances.

According to the outlook, industrial activity continues to show gradual improvement, with the Large-Scale Manufacturing (LSM) sector registering an uptick alongside growth in IT exports. The ministry says reforms introduced over the past year have begun to yield “practical results”, contributing to better revenue collection and reducing financial vulnerabilities.

The Finance Ministry expects agricultural supplies to stabilise during the Rabi season, easing pressure on key commodities. It adds that the government’s strategy to retire expensive debt ahead of schedule is likely to mitigate financial risks.

However, the report also notes mixed trends on the external front. Exports from July to October rose by only two per cent compared to the same period last year, while October alone saw an 8.6 per cent decline. Inflows in the form of foreign investment remained weak during the four-month period, registering a 26pc drop, though October posted a 22pc month-on-month improvement.

Remittances provided a brighter picture, jumping 9.3pc between July and October and nearly 12pc in October alone, offering support to the current account. The exchange rate showed relative stability, with the rupee averaging 280 against the dollar this fiscal year compared to 278 in the same period last year.

Overall, the ministry maintains that the economy is “on a gradual path to stability”, backed by reform momentum and improvements in key sectors, though risks remain tied to external financing and commodity prices.